When the Florida legislature forms a task force to study anystate-run organization, the target is often in for a grilling akinto being on the witness stand with a fierce prosecutor in theirface. That was the expectation when the legislature in Januaryestablished a special task force to review how Citizens PropertyInsurance Corporation was handling claims left over from the 2004and 2005 hurricane seasons, and to look into how well the insureris prepared for the current hurricane season. But a funny thing hashappened as the hearings kicked off in May. Citizens is winningpraise from lawmakers and the insurance industry for it's recentmoves to upgrade its customer service and act on the criticismsaimed at the insurer for its previous poor performance.

In the aftermath of the 2004 hurricane season, Citizens was atarget for criticism due to a large number of complaints fromconsumers over its claim adjusting. At the time, Citizens'officials acknowledged the insurer's claim handling system “brokedown.” Among other things, the insurer said it was too dependent onoutside claim adjusting firms, which were busy working for othercarriers. Citizens also only had two full-time positions devoted toresponding to catastrophes and, as a result, the insurer was unableto access information about claims and follow their status. Thisresulted in lengthy delays in communicating with policyholders andsettling their claims. Policyholders by the thousands complained toregulators and their representatives, triggering a number of taskforces to scrutinize Citizens' preparedness in the event of anothermajor storm season.

Spurred on by the number of consumer complaints and thecriticism from lawmakers, Citizens moved to make a number ofchanges to gain greater control over its claim handling process.For example, the insurer's catastrophe team has grown from two fulltime employees to 62 full time employees. Citizens has alsocontracted with 45 independent adjusting firms that give it accessto 6,000 adjusters. Even with the use of private adjusters,Citizens will track and monitor every claim from the adjuster levelup to the final claims' settlements. The insurer has also increasedits mobile response capability that allows it to set up to sixemergency operations centers around the state.

Task Force Focuses on Positive

Senator Mike Fasano (R-New Port Richey) has heaped praise onCitizens for putting added resources and energy behind reformingits claim-handling process. “If you asked me two years ago what Ithought of Citizens, I would have a quite different answer,” hesaid. “But in the past eight to 10 months, Citizens has done anoutstanding job and I am pleased with the progress they are makingtoward resolving claims. It is beginning to act like Florida'slargest insurance carrier and the fourth largest in thecountry.”

Fasano is part of the Task Force on Citizens Property ClaimsHandling and Resolution, which lawmakers established as part of theproperty bill enacted earlier this year. The task force is composedof four full members, with one appointment each by Governor CharlieCrist, Chief Financial Officer Alex Sink, Senate President KenPruitt (R-Port St. Lucie), and House Speaker Marco Rubio(R-Miami).

The task force members include: Michael B. Twomey, Sr., aTallahassee attorney; Mike Lancashire, vice president of claims atThe Main Street America Group in Jacksonville; Rep. Julio Robaina,(R-Miami); Heather Carruthers of Fair Insurance Rates in MonroeCounty in Key West; and Tim Loftin, senior vice president of claimsat Citizens. In addition, there are three ex-officio voting membersincluding Insurance Commissioner Kevin McCarty, Consumer AdvocateBob Milligan, and Citizens Executive Director Scott Wallace. Thetask force is charged with delivering an interim report to GovernorCrist this month and a final report by July 2008.

“We're happy for any help we can get,” said Citizens spokesmanRocky Scott, perfectly reflecting the company's accepting attitudetoward the state scrutiny. Citizens now covers 1.3 millionFloridians, making it by far the largest insurer in the state.“We're not the Citizens we were in 2004,” he said referring to newleadership and new strategies to win over doubters.

By the Numbers

At the task force's first meeting, Citizens' officials showedjust how many challenges it faced in the wake of the 2004 and 2005hurricane seasons. In 2004, the insurer had over 120,000 claimsfrom hurricanes Charley, Frances, Ivan, and Jeanne, which was farfrom anticipated. The numbers tell the story, in the 75-days afterthe hurricanes moved through the state, Citizens only closed anaverage of 37 percent of all claims. Ninety days after the storms,the average only improved to 48 percent. That is the main reasonthat regulators were inundated by over 10,000 customer complaints.By 2005, Citizens did show improvement. After receiving over180,000 claims from hurricanes Dennis, Katrina, Rita, and Wilma, bythe 75-day mark Citizens had closed an average of 76 percent of itsclaims, a number that jumped to 85 percent as of day 90.

All told, Citizens received 303,459 claims in 2004 and 2005while paying out over $5.1 billion in claims. The latest statisticsshow that Citizens has closed most of those claims, reporting that98.8 percent of all claims have been settled. As of May, theinsurer had 3,510 outstanding claims from the 2004 and 2005 storms,2,723 of which are being disputed for a total dollar amount of $120million. They included 986 cases in court, a number of whichencompass many Panhandle residents suing for full payment on homesdestroyed by wind and flood during Hurricane Ivan. Another 1,100claims have been filed for the first time in 2007.

That fact that the remaining claims are only remaining open forlegal and other reasons, not related to customer service, was notlost on Consumer Advocate Bob Milligan. ”I can't say they havefailed to close claims as much as they have gotten a lot of newones and have had a lot reopened,” he said.

Some task force members turned their attention to the openclaims. One lesson not lost on Citizens is that perhaps some timelimit should be placed on homeowners to challenge disputed claims.Officials said that some lawyers and freelance adjusters have triedto persuade homeowners to challenge claims in order to collectlarge fees. The 2004 hurricane season turned Florida into a magnetfor public adjusters, private contractors who settle claims onbehalf of the homeowner instead of working for an insurancecompany. The number of registered public adjusters in the staterose from 400 to more than 2,500, said Raymond Altieri, pastpresident of the Florida Association of Public Adjusters.

”We have created a spawning ground for this stuff to go on,”said Rep. Julio Robaina (R-Miami), who told stories of publicadjusters offering wide-screen televisions to homeowners who hirethem to challenge their insurers. In return, those adjusterscollect fees of up to 40 percent of the insurance claim check.Citizens testified that the average cost to settle a claim is$10,000.

Improvements Remain

Despite the upbeat tone about Citizens there remain someproblems that task force members would like to see corrected. CliffLong, Pensacola outreach coordinator for the Division of ConsumerServices in the Department of Financial Services, testified thatthere are lingering communication issues. The include troublereaching a live person by phone and getting a Citizens stafferknowledgeable with their specific claim.

To its credit, Citizens officials said they now require allemployees to take customer service training and they've hired aninternal consumer advocate. In time for the 2007 hurricane season,Citizens has enhanced its web site–www.citizensfla.com to include acontact list for all departments and a forum for consumerfeedback.

State officials say they like what they see so far fromCitizens, though the real test will come from the next big storm.“It is essential that we operate Citizens like a business andimprove customer service for Citizens policyholders,” said AlexSink, the state's Chief Financial Officer.

From the industry's perspective, Citizens' improvements havebeen welcomed. “Citizens has made enormous strides in claimhandling,” said Florida Insurance Council spokesman Sam Miller.“They handled 2005 better than 2004 and the tornadoes in 2006 werehandled even better.”

Miller credited Citizens new leadership for seeking public inputby holding their own hearings around the state to hear frompolicyholders. The company has added more employees and technologyto improve its work and tapped some of the expertise from privateinsurance industry, by hiring top managers from Nationwide andother insurers. “They are hiring competent and experienced mangersfamiliar with the industry,” Miller said.